Archive for October, 2012

Personal income increased 0.4 percent in September after increasing 0.1 percent in August. Wages and salaries, the largest component of personal income, increased 0.3 percent in September after increasing 0.1 percent in August. Government social benefits to persons turned up in September.

PCE (personal consumption expenditures) prices increased 0.4 percent in September, the same increase as in August. Excluding food and energy, the PCE price index increased 0.1 percent in September, the same increase as in August.

Personal saving ratePersonal saving as a percent of DPI was 3.3 percent in September, compared with 3.7 percent in August.

To learn more about personal income and outlays, read the full report.

Real gross domestic product (GDP) increased 2.0 percent in the third quarter of 2012 after increasing 1.3 percent in the second quarter, according to estimates released today by the Bureau of Economic Analysis.

Third-quarter highlightsThe following contributed to the acceleration in real GDP growth:
• Consumer spending on goods accelerated, mainly reflecting an upturn in durable goods; spending on motor vehicles and parts turned up.
• Federal government spending increased, as national defense spending increased in the third quarter after decreasing in the second quarter.
• Inventory investment also contributed to the acceleration in economic growth. An upturn in nonfarm inventory investment was partly offset by a decline (larger than in the second quarter) in farm inventory investment, reflecting the effects of the drought in the Midwest on crop production.
• Residential housing investment accelerated, as single-family structures picked up.

Offsetting these contributions to faster economic growth, business investment turned down, as spending on equipment and software slowed and spending on nonresidential structures turned negative. Net exports also subtracted from growth; a downturn in exports was only partly offset by a downturn in imports.

Personal income and personal savingThe personal saving rate—saving as a percentage of disposable personal income—was 3.7 percent in the third quarter, compared with 4.0 percent in the second quarter.

PricesPrices of goods and services purchased by U.S. residents accelerated in the third quarter, increasing 1.5 percent, following a 0.7 percent increase in the second quarter.

Energy prices turned up, while food prices turned down. Prices less food and energy rose 1.3 percent in the third quarter after rising 1.4 percent in the second quarter.

The U.S. financial account is a key component of the Bureau of Economic Analysis’ international transactions accounts (ITAs). The financial account presents the cross-border flows of funds generated by international financial activity. Cross-border flows of funds can be large and volatile because the financial markets are large and because the flows are influenced by changing financial market conditions as well as by changes in financial regulation. The volatile nature of financial flows, particularly on a quarterly basis, can be seen in the accompanying chart.

The financial account records transactions in financial assets such as loans, financial derivatives, and securities between the United States and the rest of the world. For example, if a U.S. company acquires a British company, the increase in U.S. equity investment abroad is recorded as a financial outflow. If a resident of France deposits funds in a U.S. bank by transferring funds on deposit in a French bank, the deposit in the U.S. bank is recorded as a financial inflow.

As the world’s largest economy and a major center of global financial activity, the United States is an attractive market for foreigners looking to acquire new assets. In recent years, transactions in foreign-owned assets in the United States have resulted in more financial inflows to the United States than financial outflows from transactions in U.S.-owned assets abroad. In 2011, financial inflows to the United States were more than $1 trillion while financial outflows were less than half of that, $483.7 billion, for net financial inflows of $556.3 billion.

When financial transactions are combined with current account transactions in goods, services, income, and unilateral transfers, the combination presents a nearly complete picture of all international transactions of the United States. The financial account and the current account are the major components of the ITAs. The ITAs are used to monitor both real and financial developments in the international sector of the U.S. economy.

You can read more detailed information about the financial account here.